AG's Report: Government lost RM4.89 million due to JKR's negligence

The Auditor-General's Report 2012 revealed that the government had to bear losses of RM4.89 million because the Public Works Department (JKR) failed to recover advance payments from banks/insurance companies for three projects that were terminated.

The report tabled in the Dewan Rakyat Tuesday said this would not have happened if JKR had closely monitored advance payments made and acted acted promptly.

It said an outstanding advance payment not recovered was for a project to upgrade 50 kilometres of the Batu Pahat-Ayer Hitam, Kluang, Johor by contractor Pintasan Jaya Sdn Bhd amounting to RM3.41 million.

The other two were a hostel and canteen project at Sekolah Menengah Seri Nering, Besut, Terengganu by IT Industries Sdn Bhd (RM780,000) and a library and hostel complex by at UiTM Perlis by YMY Resources Sdn Bhd (RM700,000).

From feedback obtained, JKR admitted the outstanding balance on advance payments to the contractors could not be claimed before the expiry date of advance payment guarantee because of time constraints asides several other problems that arose during the process of termination of the contracts which included transfers and absence of the related officers.

According to the report, overall, the management of contracts for JKR projects were not satisfactory.

It said there were several weaknesses in terms of adherence to regulations like contract terms not accordance to Treasury circulars, forms not standardised and delays in addressing contract variations.

To avoid future losses, the report recommended that JKR ensure contract terms were in line with the latest regulations in force.